Trump says: "They're making a mistake because I have a gut, and my gut tells me more sometimes than anybody else's brain can ever tell me".

Federal Reserve Chairman Jerome Powell cast a bright picture of the USA economy Wednesday and appeared to suggest that the Fed might consider a pause in its interest rate hikes next year to assess the impact of its credit tightening.

Trump's sentiments are not out of step with some economists, but many analysts say that the Fed will resist backing off a December increase to avoid looking like it is not independent from the president.

Since stock prices have reached record highs over the past few years, they have a lot more room to fall, the report notes, stating that "elevated valuation pressures imply a greater possibility of outsized drops in asset prices".

Trump claimed the Fed is "way off-base with what they're doing", in raising interest rates that were at historical lows following the financial meltdown that started in 2007.

Following the interview, Trump sent out a flurry of tweets criticizing General Motors' ($GM) CEO Mary Barra for her decision to shutter plants and cut jobs across North America.

On Wednesday, Powell may reveal more about his thinking when he speaks to the Economic Club of NY.

Cheap debt and a one-time tax loophole put in place by the administration of US President Donald Trump have helped increase share dividends and asset prices, Washington Post columnist Steven Pearlstein wrote in June.

The Fed has lagged behind other major central banks in publishing a financial stability report, but it's now expected to issue such documents twice a year. It described funding risks in the financial system as low, meaning the chance that mispricing of one asset - in 2007, for example, housing - triggers a run by investors that puts the solvency of US banks at risk. Businesses with weak balance sheets could prove problematic in the event of an economic downturn, as they would be less likely to weather selling and could exacerbate a dip in the market, Powell explained. But signs of a slowdown overseas and almost two months of market volatility - including a sharp selloff last week - have clouded an otherwise mostly rosy US picture in which the economy is growing well above potential and unemployment is the lowest since the 1960s.

Powell also identified several potential triggers to financial distress, including global trade conflicts, Brexit negotiations, Italy's budget plan, and "cyber-related disruptions". Powell, in his speech, said his overall view is that "financial stability vulnerabilities are at a moderate level".

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